5 tips for getting started with stocks
Many people are considering investing their money in stocks. That's right - especially during a period of low-interest rates and inflation. However, before you start, you should do your research. A few tips on how to invest in stocks and make the most of your money.
Tip 1. Find out more in advance
It sounds corny, but you have to understand what your money is. If you are interested in a special stock and do not want to rely only on your instincts, you should, for example, take a look at the AG annual report, current quarterly figures, analysis, and economic forecasts.
Or you are using the experience of professionals and prefer to invest in a stock fund. Advantage: the analysis is taken over by the fund managers at your savings bank or bank. Here you should also find out more: for example, how is the company ranked in the annual capital rating? And does the fund's focus match your risk and reward profile? Your savings bank advisor will be happy to help you make the right choice and give you the best advice.
Tip 2: Don't bet everything on one card
Did you find out about the exchange and have a specific stock in mind and how important is liquidity to you? This is a good start for newbies. But perhaps you are thinking of several names and cannot decide. You don't have to do this. Because when you first start with a stock fund, your money will be divided into hundreds of different values. As an investor, you minimize the risk that the company will write bad numbers and even go bankrupt.
If you want to invest in stocks but want a little less risk, so-called mixed funds are also interesting. Money is invested not only in stocks but also in interest-bearing securities. Depending on how fund managers assess the markets, the shareholding can sometimes be reduced.
So you then allocate it twice: you allocate your money between stocks AND bonds - and again within these two asset classes for many different individual values.
Tip 3: Invest only the capital you have
You should only invest in capital markets that are not otherwise planned for you. If you know that you will need money to make a living, pay off a personal loan, or make other purchases within the next five years, give up. Because you should avoid the fixed point of sale, which in this case can be especially unfavorable.
Example: you need to buy a car in two years. Until then, invest in stocks. But just at the very moment when you need a car, the weak phase begins in the stock market. Result: You have to sell at a loss.
Tip 4: Be patient with your system
You need a new kitchen, but a few thousand euros are missing. So put your money on the exchange and get the missing funds as quickly as possible? Please no! When investing money in the stock market, you need restraint - it is better not to bet on the fast euro. On the other hand, it is a good idea to save savings regularly with a savings plan.
When you need quick profits, you will inevitably have to make risky investments. It might go well, but too often newbies fall into the trap here. Because with an unbalanced portfolio, you can be naked.
On the other hand, if you are patient and invest wisely, you are much more likely to make the best possible investment. Over time, the risk of losing money on stocks decreases significantly. Anyone who has invested in Dax stock with a savings plan for at least eleven years has always ended up losing money. However, investment funds are also prone to price fluctuations.
Tip 5: Don't let loss make you nervous
Of course, you enter the stock race with the hope of making the highest possible profit. But the stock market is always on the move, and at some point, your portfolio may show losses.
Exchange rate fluctuations are normal and occur over and over again. This is not a problem, but, on the contrary, a sign that the securities markets are working and supply and demand is changing. Get ready for fixes to happen and don't panic or take any action. React with composure.In the case of stocks, you can set a stop-loss limit as a precautionary measure, in other words, a value above which you want to sell your investment. On the other hand, a price correction may be just the right time to buy more at a lower price.